Easy access rates to benefit savers

Three-quarters of parents are not contributing to their offspring’s child trust fund

Competition in the easy access savings account market is hotting up with the launch of two new best buy rates.

Coventry Building Society has launched an eSave account for the over-50s paying interest of 3.25% fixed for a year with unlimited penalty-free withdrawals.

It is joined by Alliance & Leicester, which is offering a new online saver with a rate of 3.15%.

Five other easy access accounts have been launched during the past three weeks, while another five providers, including big names such as Intelligent Finance and ING Direct, have increased the rates they offer on existing ones.

The changes mean there are now eight easy access accounts paying returns of more than 3%.

Kevin Mountford, head of banking at moneysupermarket.com, said: "This level of activity is unusual given the Bank of England base rate hasn't changed since March.

"But it's great news for savers, particularly those who don't have money they can afford to lock away in a fixed rate account.

"Providers are still desperate for our cash so the competition is likely to remain strong for some time to come."

Banks and building societies had previously been focusing on fixed rate accounts and cash ISAs, rewarding savers who were prepared to lock up their money for a fixed period of time with higher rates.

Competition has also recently increased in the internet savings market, as providers unable to compete in the fixed rate one, used these accounts, which tend to have lower running costs, to try to tempt savers to deposit cash with them.